Vale orders 12 VLOC's at Rongsheng

Brazilian Companhia Vale do Rio Doce (Vale) reports that it entered into a contract with China's Jiangsu Rongsheng Shipbuilding and Heavy Industries (Rongsheng) for the construction of twelve very large ore carriers, each with a capacity of 400,000 dwt.

Vale is China's largest supplier of iron ore, delivering nearly 78 million tons, or 23.2% of Chinese imports, in 2006.

The total cost of Vale's investment in the ore carriers is US$ 1.6 billion. The first of these vessels is expected in early 2011 and the completion of the order is expected to take place in 2012.

Vale is creating a dedicated maritime shuttle service between Brazil and Asia, where it expects most of the future growth of the global demand for iron ore to come from.

The ships ordered are the largest ore carriers to be built in the world and they will be part of the shuttle service. The contract with Rongsheng follows contracts announced by Vale in May 2007 covering four 388,000 dwt ships, one 300,000 dwt ship and one 290,000 dwt converted crude carrier.

When all ships are delivered, Vale's Brazil-Asia shuttle service will have 18 very large ore carriers, with a total tonnage of 7.1 million dwt, in addition to our three already existing capesize vessels. The fleet will have an estimated capacity to carry 30.2 million metric tons of iron ore per year from Brazil to Asia, corresponding to 31% of Vale's shipments to China in 2007.

China Radio International (CRI) says the ships will be classed by DNV.

Rongsheng, China's top private ship builder,plans a US$2 billion stock market listing as early as the end of this year, reports CRI. It quotes chairman Chen Qiang as calling the Val order "a landmark for China" as the ships will be the largest ship built by China in terms of tonnage."

Rongsheng, in which a group of investors including Goldman Sachs and D.E. Shaw & Co last year bought a US$250 million minority stake, plans a listing by year-end or early 2009, in either Singapore, Hong Kong, or on the mainland, CRI reports.

"For the IPO, our main goal is to make Rongsheng a real international company. It's not just for the funding," Chen said.